First the Good. After the announcement that sequestration would cut housing assistance payments by 6% in the Section 8 program myself, like many others, feared that program participants in the Section 8 program would be at immediate risk of losing their housing. Luckily for Dane County we have some unspent budget authority that HUD is using to keep our assistance levels up and we have not had to terminate anyone from the Housing Choice voucher program to date for lack of funding.
The Bad. We only have a limited amount of additional budget authority to bridge that gap and unless Congress does something to end the sequester and fully fund HUD in the next budget, that buffer will run out. Long term forecasting will help us gauge how soon this will happen and we will deal with reduced funding by attrition, meaning we will be forced to stop issuing Section 8 vouchers to families who have been on our waiting list for over 5 years and allow our program to shrink as participants come off. It is better than terminating assistance to current program participants, but it still leaves families in need of assistance homeless, paying more that 40% of their income in rent or living in sub-standard housing without reprieve.
The Scary. The 6% cuts also impact the administration fees that PHAs are paid to run the Section 8 program on behalf of HUD. 6% wouldn’t be so dire if these fees had not already been cut by 25% at the beginning of 2012. HUD determines the amount of administrative fees each PHA needs to run its program and for the DCHA that comes to $67.70 per voucher per month, but due to Congress’s continual under-funding of HUD we are now only receiving 69% or $46.71 per voucher. Compounded over the 1022 vouchers the DCHA has under lease that is a reduction of $21,451 per month and $257,421 per year in cuts.
The vast majority of administration funding that allows the DCHA (and most other PHAs across the country) to run these programs and serve very low income families in our communities is generated by these Section 8 administration fees. Without them we would not be able to pay our staff, rent our office space or provide the basic services that Dane County needs. So far we have adapted to the reduced funding by shutting down our Home Ownership program, lying off staff, reducing overhead and shrinking our office space. We had created a very lean budget in order to break even under the 25% cut, but the extra 6% cut under sequestration puts us back in the red, and back to the cutting floor without much left to cut.
As a community and a country we need to decide where our priorities lie; are they sheltering the homeless or would we prefer to give tax breaks to the wealthy and corporations? Should we provide decent, safe and sanitary housing to the elderly and disabled or should we increase the size of our military? If you believe as I do that we need to do some nation building here at home, please contact your elected officials and encourage them to fully fund the Department of Housing and Urban Development in 2014.
As we head closer to the sequester people are trying to figure out how the automatic budget cuts will effect everything from health care to airport flight delays. While some cuts may be more annoying than others, some are sure to be life threatening. Last Friday Public Housing Authorities (PHAs) across the country received an email from Sandra Henriquez, Assistant Secretary of the Office of Public and Indian Housing, a division of HUD. The letter attached warned PHAs to expect a 6% cut to their Section 8 program for the remainder of 2013.
6% percent may not seem like a lot but let’s break down the numbers and their impact on low-income families in Dane County communities outside of the City of Madison. If you are not familiar with the program, The Housing Choice Voucher program (often refereed to as Section 8) allows families whose income falls below HUD published limits to apply at their local PHA for a voucher. This voucher allows them to select the housing of their choice and pay 30% of their income in rent, a level that the federal government has determined to be affordable. The balance of the rent, up to HUD’s publisher Fair Market Rent, is then paid to the landlord by the PHA in the form of a Housing Assistance Payment (HAP). If the Sequestration cuts take effect starting April 1 HAP payments to PHAs will be cut by 6%.
For the Dane County Housing authority this means a $36,120 reduction in HAP payments every month. With the average HAP payment being about $600, this cut means that 60 families will lose their rent assistance. That’s 60 families that are now homeless, 60 vacant housing units not collecting rent and 60 requests to local shelters for emergency assistance. When family members become homeless they are less likely to be able to keep a job or find a new job. Children are less likely to attend school and if they do, perform at a lower level that their peers. When people become homeless they are more likely to face substance abuse issues, mental health problems and incarceration. All of these costs far exceeding the $600 per month rent subsidy that was lost because we couldn’t agree on how to fix the budget.
So will the sequester lower your taxes? Will it lower the unemployment rate or the crime rate? Will it improve the economy? Or is it more likely that the across the board spending cuts will increase homelessness, increase unemployment, increase crime, push us back into recession and pass the cost from the federal government down to the local, county and state level? 60 new homeless families in Dane county is scary but remember I am only talking about the communities outside of Madison. When you add in the cuts to the city and the other 71 counties in Wisconsin we are facing a homelessness crisis starting April 1, 2013. And for what? What did we gain? It is time for our representatives in the federal government to fix more problems that they create.